The United States and Japan will step up their defence cooperation to deal with the threat from nuclear-armed North Korea as tensions in East Asia remain high, officials from the two allies said on Thursday.

Concerns over linking carbon schemes

Linking the carbon price to overseas markets could see Europe setting the rate of Australia's carbon tax, a parliamentary inquiry has heard.

The coalition has also raised doubts about the integrity of the European Union's emissions trading scheme (EU ETS), citing claims of fraud and manipulation within the scheme.

A package of bills tying Australia's carbon pricing mechanism to the EU ETS passed the House of Representatives earlier this month.

As well as linking the schemes, the legislation dumps a $15 floor price that would have applied once the carbon price moved to a floating market-based mechanism in 2015.

A parliamentary inquiry was held into the bills, and the report was tabled in the Senate on Monday.

Coalition senators urged the Senate to oppose the bills, warning linking the schemes would see the EU set the level of Australia's carbon tax.

The inquiry heard that under certain circumstances, Australia's carbon price could spike if the EU adopted a more ambitious target, restricted permits or if the Australian dollar waned against the euro.